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New Delhi: Prime Minister Narendra Modi’s recent comparison of the US and Israel-initiated West Asia conflict with COVID-19 pandemic, saying “we will overcome this too”, has put a spotlight on the scale of economic stress building up even as the government continues to urge calm.

Despite its reassurances that all is well, the government has not been able to respond to the on-ground realities of the ordinary Indian. As a result, the West Asia crisis is testing India’s ability to handle the economic stress – on the oil shock, the fiscal hit, a possible migrant crisis, and the macroeconomic stress of it all.

Half a million day labourers have lost their jobs, say textile associations in Gujarat. All, as a result of the downstream impact of the West Asian war.

NHK World reports today that the textile industry has taken a big hit, with the South Gujarat Textile Processors Association saying that nearly half of all factories in Surat have halted operations because of the LPG shortage. “Even if this conflict stops tomorrow, it will take around six to 12 months to get back to normal,” said Jitendra Vakharia, president of the association. “In the future, there will still be a shortage of raw materials and textiles. Owners will have to accept it.”

Here are six ways the global crisis is impacting the Indian economy.

Manufacturing slowdown

Manufacturing slowdown

Manufacturing sector activity in India slowed to a 45-month low in March, and a survey of private sector companies has attributed this to the impact of the conflict on costs, demand and new order levels, The Hindu has reported.

The HSBC India Manufacturing Purchasing Managers’ Index fell sharply from 56.9 in February to 53.9 in March 2026. This was the lowest reading since June 2022.

“Growth in India’s manufacturing industry took a step back in March as cost pressures, fierce competition, heightened market uncertainty, and the war in the Middle East all contributed to softer increases in new orders and output,” the report stated. “Firms also faced an intensification of cost pressures, the steepest since August 2022.”

The conflict, which began on February 28 following the US-Israeli strikes on Iran, has caused the Indian rupee to fall to a record low of 95.21 per dollar (March 31), becoming Asia’s worst performer against the US........

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